Power Struggle

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Another big factor behind high gasoline prices is tight U.S. refining capacity. America has built no new refineries in the past 20 years. The reason is that, until recently, turning oil into gasoline and other refined products like heating oil was a low-profit business. There was too much capacity, not too little. According to the Energy Information Agency, the U.S. had 324 refineries in 1981, when the industry was deregulated. By last year, there were 158.

Ironically, cheap gasoline prices during the final years of the Clinton-era boom, which helped propel sales of fuel-gobbling suvs, pushed refineries to the wall. To make matters worse, most distributors believed that OPEC would boost production. Betting that oil and gasoline would soon be cheaper, they neglected to build any significant reserves. Result: inventories of gasoline, home heating oil and other refined products have been at a low ebb for nearly two years, leaving prices vulnerable to the slightest market upset. Now consumers are dealing with it in a tough economic climate.

Soaring power costs threaten to extend the economic slowdown. Already, most of the Northwest's aluminum smelters are shut down. Jobs are being lost. Business owners in the East wonder if they will be next. And money that would have been spent buying goods and services is going into the gas tank. If George W. Bush wants some insight into short-term issues, he should consult Dad. George Bush Sr. didn't cause the brief recession in 1990-91, but he paid for it. Similarly, Bush Jr. didn't cause this current energy crisis. But he now owns it, lock, stock and oil barrel.